Alliance & Leicester "administration" (!?!) charges

tacanyo

Thanks to every one on this thread for the advise. Wrote a letter to A&L along the lines of the outline letter, enclosing the original printed off T&Cs when I applied online. Got an initial acknowledgment letter and then received a letter yesterday to say they would reduce from £295.00 to the original £85.00.

All with one letter.

Thanks again.

Tacanyo.

Ian_W

Well done Tacanyo.

Usually takes 3 letters to get there, 1 from a machine followed by a refusal from a human followed by one enclosing a cheque. So anyone reading this, don't give up after one refusal.

rustyjames

Congers wrote:

Just a quick update. This morning I recieved a reply to my second letter to A&L complaining about the increase in the admin charges. Lo and behold they are offering a goodwill gesture by reducing this charge down to £225, a reduction of £70!

So, what do you all think? Take the £225, or go for a third letter, and possible further reduction?

Does anybody know if I'll jeopardise the reduction I've already got if I do this? They have said that I need to accept this offer within the next 28 days.

Thanks

I've just had this same offer after a single letter and wondered if anyone had had success with rejecting it and continuing their complaint.

rustyjames

Congers wrote:

I'd just like to convey my thanks to all who've contributed to this thread. Today I received a letter from Alliance and Leicester in response to my third letter of complaint, in which they have now reduced the Admin charge down to £140.

Part of me says to fight on to get it down to the original figure, but I think I'll cut and run and take the £140.

Many thanks again to all.

Ignore the last post - just seen this one so it seems it is definitely worth continuing.

don9999

I know this is quite an 'old' issue - especially related to A&L.

However, whilst A&L continue to charge a £295 'Redemption Administration Charge' is this still much greater than other companies?

I have just come to the end of my discount rate period, and was investigating if there were any good deals around. I only have a small mortgage of around £50k, and aiming to pay it off in about 15 years.

Tracker mortgages seem the best (for me) and there are several similar deals such as Skipton at 4.99% - no special period, and in particular NO FEES (no application fee, no completion fee, no valuation fee, no legal fee) AND £150 cashback!

Anyway, I contacted my current lender, A&L to see if they had anything suitable. The closest they had was a 4.99% tracker with a £499 fee. I stated that this wasn't competitive, since I was already offered that rate, but with no fees.

Their reply was......'ah but then you would have to pay the redemption fee to switch to them!'

In 'my' view, they are using this purely as a 'penalty fee' to prevent me from switching lender.

I cannot complain that the fee has risen since I took out the mortgage, since it has always been stated as £295 - although I admit I overlooked it when I applied.

However, I do still believe that it is hugely disproportional with the 'actual' costs involved in closing an account. I am convinced they are purely using it as a penalty fee.

Hence why I'dlike to know whether it is in line with other lenders, or much higher.

Does anyone thing it worth me pursuing them for a reduction? I cannot claim they have increased it since I took out the mortgage, but if the fees are higher than other companies then I could easily argue that they are disproportional with the costs involved.

What do you think? Bite the bullet and pay, or start writing letters.......

Cheers,
Don

W1zz

I'm about to change my mortgage which I currently hold with Alliance and Leicester. It was a 2 year 1.4% discount Feesaver mortgage taken out in July 2004.

I still have the PDF's of my application and quote which shows on 3/7/2004 the 'Early Closure administration charge' is £195. (If it's of any use to anyone, I've put a copy >HERE<)

I do not recall recieving any letters since informing me that this fee has been raised.

So - Do I contact Alliance & Leicester and ask for a settlement figure for the day/date my 2 year discount mortgage ends?

Is it on this settlement letter that they will slip in the £295 settlment figure?

As I have evidence of the £195 fee on the mortgage I applied for, can they still get away with charging me the higher figure?

thanks,

W1zz

Ian_W

W1zz,
Probably cost you 3 stamps and the time to type the letters. When you get the first no reply asking for a dispute letter indicating you intend to go to the FOS as you're not satisfied as per lisyloos at post#22, if they don't cave in after 2 letters I think its a £ to a pinch of pig !!!!!! they will before they'll issue a dispute letter.
don9999,
Missed your post first time around. More difficult as you agreed [albeit unwittingly] to accept the charge. However OFT have been very critical of all bank/lender/credit card charges that are disproportionate to the work involved. On that basis why not? The charge is OTT - someone who works for a lender posted on here a few months ago detailling the work involved and s/he reckoned 50 quid tops would cover it. I do think it's important to realise that you'll get at least 1, possibly 2 refusals but you taking them to the FOS does cost so I'd be quite surprised if they didn't reduce it.

Let us know how you both go on? BoL.

don9999

Thanks Ian. I'm in the process of moving my mortgage - once complete I will write to A&L complaining about the level of charge.

I'm particularly annoyed because they appeared to USE IT as a penalty charge (which, after all, it is!) Only when I told them their mortgage products were uncompetative and that I was considering moving, did the lady say 'ah, but then you'd have to pay the Redemption Administration Charge'

(For anyone interested, I'm moving to the Skipton. Taking a full-term Tracker at 4.9%. No booking fee, no valuation fee and no legal fees. Plus £150 cash back. Can make any number of over-payments, and can redeem at any time. They too, have a Redemption charge, which is £175.)

Cheers,
Don

MarkyMarkD

I can't agree with Ian W at all on this matter.

There's absolutely no basis under which the Ombudsman or anyone else will deny the acceptability of an account closure charge which was fully disclosed, and the amount of which has not changed. In don9999's case, that fee was included within the illustration documentation and the APR and is an entirely legitimate part of the loan charges.

It is entirely up to the lender whether they choose to recoup the benefits of a low rate through an up-front application fee, or an end of product fee.

It's far fairer to loyal customers to bias the charges towards the END of a customer's relationship with their lender, than to the beginning - that way, those who stay do not pay and those who leave do pay it.

It might seem like "a penalty fee to prevent me switching lenders", but you can equally fairly regard it is an incentive to stay - a loyalty bonus - in that you avoid paying the fee if you do not leave the lender.

It all boils down to terminology and semantics, but as I said at the outset you can forget taking a case like this to the Ombudsman IMHO.

Incidentally, it is part of a solicitor's responsibilities to make sure that his client understands the terms of a mortgage agreement they are committing themselves to - any competent solicitor would have ensured you understood the £295 fee involved when redeeming the account. My solicitor has certainly discussed this each time we have remortgaged with him.

don9999

Thanks MMD,

I do agree with you, that my claim is weak. I may just bite the bullet and accept it.

However, I do not agree with your analogy.
If you have to pay for something you don't want, it is a penalty fee.
If you are PAID for something you DO want, then it is a loyalty payment.

For example, the Brittania Building Society pay out an annual 'membership reward' for all customers who stay with them beyond two years.
THIS is a loyalty payment encouraging people to stay - those that leave the society, lose out.

However, we are being charged an extortionate PENALTY FEE for leaving the company. We ALL know that the fee is way above what it actually costs the society.

Anyway, I appreciate the advice, and as I say, I probably won't pursue. I've re-read my original documentation and realise that I did not pay any up front fees (or rather I DID pay a £430 booking fee, but they had a deal on which meant it got refunded).

Cheers,
Don